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Friday, 12 May 2017

Canadian Investment Manager Makes Big Bet on U.S. Student Housing

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Commercial Real Estate Direct Staff Report

QuadReal Property Group, a Vancouver, British Columbia, investment manager, has invested $600 million in a venture that will buy, develop and manage student-housing properties in the United States.

The investment would be its first foray into the student-housing sector in the U.S., and its largest effort in the sector. It owns student-housing properties in New Zealand, Australia, the United Kingdom and Ireland.

The company was launched last June to oversee the commercial real estate assets of British Columbia Investment Management Corp., which has some $120 billion of assets under management and invests on behalf of public-sector pensions. QuadReal has $18 billion of real estate assets under management.

For its latest venture, it has teamed with GI Partners, a San Francisco investment manager that has backed real estate companies such as Digital Realty Trust, Ladder Capital Corp. and Stag Industrial. Also part of the venture is CA Student Living, the former Campus Acquisitions of Chicago. QuadReal's two partners are charged with operating the venture and hold a minority interest in it.

CA Student is among the country's most active players in the student-housing sector. It has developed some 20,000 student-housing beds since then, while buying another 5,000, since its founding in 2004.

QuadReal has committed $600 million to the venture, which has been seeded with 10 properties that CA Student had developed. It will buy another six properties from CA Student that are under various stages of development and should be delivered within the next three months. The properties, which are scattered among 16 states, typically are just outside of major universities. While some have residency contracts with the universities they target, others do not.

It will be leveraging individual investments by between 40 percent and 60 percent, with its portfolio having a targeted leverage level of 55 percent. That means it could have some $1.3 billion or more of buying power. But QuadReal can add to its initial commitment.

"We're not capped," explained Jonathan Dubois-Phillips, president of international real estate for the company. However, the company's expectation is to have its capital fully deployed by 2019.

Dubois-Phillips explained that the student-housing sector in the U.S. has proven a resilient asset class, having fared relatively well during the last two real estate downturns. Meanwhile, the country's existing stock is aging, which presents an "opportunity to invest in long-term assets that provide an ongoing, dependable revenue stream and align with QuadReal's desire for strong investment returns," he said.

 

He added that QuadReal's parent is expected to substantially increase its assets under management to perhaps $200 billion in the coming decade. That, coupled with the fact that the investment manager considers itself to be under-allocated to real estate, and possibly over-exposed to the Canadian real estate market, is prompting it to look outside the country for compelling investment opportunities.

 

Comments? E-mail Orest Mandzy, or call him at (267) 247-0112, Ext. 211.

 



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“The Weekly” is Commercial Real Estate Direct’s PDF newsletter, sent to subscribers every Friday morning. With over 100 news stories published on Commercial Real Estate Direct each week, “The Weekly” features the top stories in commercial real estate that industry participants need to know first. “The Weekly” also contains:

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Additional Info

  • Syndicate to Realpoint: No
  • Sector: Multifamily
  • Subject: Institutional Investment (INS), Property Acquisitions (ACQ)
  • Private: No
Read 416 times Last modified on Monday, 15 May 2017

Data Digest

 

CMBS DELINQUENCY VOLUME

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CMBS SPECIAL SERVICING VOLUME

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Top Bookrunners Domestic, Private-Label CMBS - 2016
Investment Bank #Deals Vol$mln MktShr%
JPMorgan Securities 14.94 10,350.16 15.14
Deutsche Bank 14.21 9,926.60 14.52
Wells Fargo Securities 13.36 9,513.96 13.92
Citigroup 10.87 8,061.79 11.80
Goldman Sachs 10.05 7,563.72 11.07

 

RCA CPPI

 

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CMBS 2.0 Spreads

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Top CMBS Loan Contributors - 2016
Lender #Loans Vol$mln MktShr%
JPMorgan Chase Bank 133.67 8,670.33 13.34
Goldman Sachs 156.20 7,418.37 11.41
Deutsche Bank 178.17 6,510.75 10.02
Citigroup 184.41 5,512.20 8.48
Morgan Stanley 113.18 4,130.53 6.35

 

 

 

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